Labour's highlights of 2011
Labour leader Ed Miliband has used his new year message to say that the Labour Party must convince people in 2012 that "optimism can defeat despair".
He said there was an alternative to rising unemployment and years of falling living standards for families.
He said people must not be persuaded "in hard times nothing can be done".
He said Britain needed "profound" change and Labour must "renew and reinvent its mission" and "rise to the challenge" in the year ahead.
"When the challenges facing our country are greatest for a generation, many people feel politics cannot answer their problems. Some believe things would be the same whoever was in charge. And others fear the government is in the grip of forces so powerful that nothing can be done," he said.
"It suits the current Conservative-led government to go along with this idea. Having failed in their promise to make Britain a safe haven, they now say that there is no alternative to rising joblessness and years of falling living standards for working people. It is a counsel of despair.
"When so many are sceptical about politics the easy route for politicians is to join in and accept the cynicism. To say simply that in hard times nothing can be done. But that's not why I came into politics and it's not what the Labour Party stands for.
'The Great Depression'
"My party's mission in 2012 is to show politics can make a difference. To demonstrate that optimism can defeat despair. That politics can rise to meet the challenges Britain faces even when the challenges are so great.
"When those in power say, 'You're going to face five bad years and there is nothing to be done about it,' that is a statement of their values and priorities.
"But neither in Britain, nor across the world, can anyone afford just to stand back and watch unemployment rise, growth stagnate and indeed borrowing go higher as a result.
"When politicians shrug their shoulders in the face of other people's despair, they are not just abdicating responsibility, they are making clear choices. That is as true now as it was in the Great Depression during the 1930s."
Mr Miliband said the autumn statement had been more generous to bankers than to the lowest earners and said Labour would bring in a more "responsible capitalism".
"I believe this country needs profound change, not small change. Not to seek simply a continuation of what Labour did in government but to renew and reinvent our party's mission in response to the urgency of changed times. Everything I have seen and done since I got this job has convinced me I am right to believe that.
"Throughout our country's history, tough times have seen us not lower our sights but raise them. We need equal ambition for the future if we are to avoid our country heading further and faster in the wrong direction: a lost generation of young people, Britain struggling to compete in the world, and greater inequality."
Labour would seek to build an industrial future "beyond financial services", tackling vested interests from banks to utilities that "squeeze living standards" and a "fairer sharing of rewards so that we discourage irresponsibility at the top and the bottom of society".
Mr Miliband's message comes the day after Lib Dem leader Nick Clegg warned that next year "poses many great challenges for everyone".
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